I don’t have time to expand on this post but David has two fractionally positioned topfinders on the S&P 500 with very advanced cumulative volume readings measuring the Short Term and Intermediate Term trends in addition to our colleague BoB English’s detrended MIDAS curve’s downward trendline about to be tested by the Dow (www.precisioncapmgt.com). Take your pick: the weekly MACD histogram has been negatively diverging since mid-2009, open interest on the major indices is producing excessive overbought readings on normative COT indicators such as Larry Williams’ COT Index, and junk bond yields have hit an all time low of 6.8 per cent. The Baltic Dry Index, an accurate forecaster of the direction of the Intermediate to Primary degree trend, has turned down since October 2010 and I have a couple of standard MIDAS resistance curves already running on it. I should expand on this post at some stage with the long-term secular degree Elliott Wave count, but for now here’s what I hope is an accurate solution to the Long Term Delta on the Dow.

A five wave Elliott Intermediate trend impulse is about to complete alongside the start of a new Delta cycle. The market is at a very important juncture: either the new Delta move is consistent with a relatively shallow correction of this five wave impulse, in which case the market will continue to strengthen in the second half of 2011 with the next price objective being the 2007 high, or this Delta move will usher in the start of a cycle degree wave C which, in terms of price and time, would be proportionate to wave A (ie, the decline from 2008 into March 2009) according to conventional Elliott Wave theory.

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Figure 1: Dow with provisional Long Term Delta solution (pending confirmation)

Figure 2: close-up of LTD (pending confirmation)

Figure 3: putative wavecount plus MIDAS Displacement Channel

A.Coles, 22nd Feb 2011

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